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2013 Supreme(Online)(KER) 2301
HIGH COURT OF KERALA
V.CHITAMBARESH, J
MR ANIL JOSEPH – Appellant
Versus
ASSET RECONSTRUCTION COMPANY INDIA LTDARCIL – Respondent
WRIT PETITION (CIVIL) 22058/2013
The court highlighted the supremacy of the Debts Recovery Tribunal in handling SARFAESI related disputes over constitutional remedies.
Headnote:
SARFAESI - Debts Recovery - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act - Sections 13 (4), 14, and 17 - The court emphasized the need for petitioners to utilize remedies through the Debts Recovery Tribunal regarding measures taken under the SARFAESI Act to reclaim possession of secured property.
Fact of the Case:
Petitioners challenged the bank's actions under the SARFAESI Act after symbolic possession was taken of their industrial property while claiming to have made substantial repayments and seeking revival of sick units.
Finding of the Court:
The court found that the Debts Recovery Tribunal was better suited to consider the ongoing settlement proposals from petitioners, given the eligibility for revival proceedings.
Issues: Whether the measures taken under the SARFAESI Act by the Asset Reconstruction Company were justifiable given the circumstances and claims made by the petitioners.
Ratio Decidendi: The court reaffirmed that the disputes concerning recovery and settlement of dues should be resolved within the framework of the Debts Recovery Tribunal, not through constitutional writ petitions.
Final Decision: Writ Petition disposed of, maintaining status quo for one month.
JUDGMENT
The petitioners had earlier moved the Debts Recovery Tribunal in S.A. No. 1298/2011 when the first respondent bank took measures under Section 13 (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. The order passed therein was challenged by the petitioners in Appeal No. 921/2011 before the Debts Recovery Appellate Tribunal and the bank thereupon took symbolic possession of the property. There were also writ petitions and writ appeals on the file of this Honourable Court wherein instalment facility was granted to pay off the debt due to the bank which ofcourse was not availed of to its full. The property is three industrial units engaged in the preparation of sweets and confectioneries and also the residential units of the proprietors of three Companies.
2. The second respondent Asset Reconstruction Company has now stepped into the shoes of the first respondent WP(C) No. 22058/2013 bank and has initiated steps to take actual physical possession of the property. Ext.P9 order has recently been passed by the court of the Chief Judicial Magistrate to take physical possession of the property offered as security interest in terms of Section 14 of SARFAESI Act. The contention of the petitioners are two fold and they are:
(i) Substantial payments have since been made pursuant to the orders of the Debts Recovery Tribunal and also Exts.P2 and P3 judgments in Writ Petitions and Writ Appeals.
(ii) The Industries Department of the Government of Kerala has initiated proceedings for revival of the sick units of the petitioners evidenced by Ext.P12 communication.
3. The subsequent developments as above can as well be canvassed by the petitioner in proceedings before the Debts Recovery Tribunal again. The act of taking physical possession at the instance of the second respondent Asset Reconstruction Company is also measure under Section 13 (4) of the SARFAESI WP(C) No. 22058/2013 Act which can be called in question under Section 17 thereof. The Debts Recovery Tribunal is better equipped to consider the settlement proposal made by the petitioners and arrive at a decision in view of the ongoing process for revival of the sick units as well. It is not equitable to grant any relief to the petitioner under Article 226 of the Constitution of India in view of United Bank of India Vs. Satyawati Tandon and others [2010 (8) SCC 110].
4. I however direct the parties to maintain status quo for a period of one month to enable the parties to work out their remedy as above.
The Writ Petition is disposed of.
V. CHITAMBARESH JUDGE
